Embraer S.A. (ERJ Quick QuoteERJ - Free Report) announced that it has delivered 54 jets to customers in the third quarter and 150 jets in the first nine months of 2016. The deliveries were divided equally between the commercial aviation and business aviation markets.

On a year-over-year basis, commercial deliveries increased 38.2%. On the other hand, even though the company delivered 12 large executive jets, up 33%, executive aviation deliveries tanked 17% year over year.

Guidance for 2016

During the second-quarter earnings release, management had guided deliveries of 105–110 jets in Commercial Aviation, and 35–45 large jets and 70–80 light jets in Executive Aviation.

Embraer is on track to meet management’s guidance, having already delivered 76 Commercial Aviation jets, 26 large jets and 48 light jets in the first nine months of the year.

Q3 Backlog

The company exited the third quarter with an order backlog of $21.4 billion, slightly lower than the second-quarter level of $21.9 billion.

During the third quarter, Embraer and China's Colorful Guizhou Airlines announced a firm order for two E190 jetliners, with an option for 3 more. Based on current list prices, the contract value will be $249 million, if all options are exercised by the parties.

Embraer also received a firm order for two Phenom 300 business jets from China's Colorful Yunnan during the quarter.

Farnborough Air Show

This international air show offers Embraer and other premier commercial jet manufacturers a platform to introduce their premium products to customers across the world. Orders received during the event would continue to boost the company’s existing backlog.

Embraer inked an agreement with Kalstar Aviation, an Indonesian regional operator, at the air show for five E190-E2s. The contract included five purchase rights for the same model, bringing the total potential orders to 10 jets.

Moreover, the company announced signing of a Letter of Intent with Israeli airline, Arkia, for up to 10 E195-E2 jets. At current list prices, the contract has an estimated total value of $650 million.

Long-Term Outlook

Embraer expects demand for the 70−130+ seat category to reach nearly 6,400 in the next two decades, representing a market value of $300 billion. The company is poised to benefit from the surge in demand for the 130-seat aircraft category.

The Boeing Company’s (BA Quick QuoteBA - Free Report) research report projects about 39,620 deliveries in the next two decades, which include all categories of aircraft. The entire value of new deliveries is estimated to be $5.9 trillion. Note that the larger commercial aircraft category is being dominated by Boeing and Airbus Group SE (EADSY Quick QuoteEADSY - Free Report) .

However, these two giants might face challenges from the Chinese state-owned aircraft manufacturer, The Commercial Aircraft Corporation of China, Ltd. (Comac). Cormac will start producing airplanes with a capacity of over 150 passengers and could become a major alternative for airline operators.

Zacks Rank & a Key Pick

Embraer currently has a Zacks Rank #3 (Hold). A better-ranked stock in the aerospace & defense space is Engility Holdings, Inc. . The company sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Engility recorded a positive average earnings surprise of 12.09% in the four trailing quarters. Its earnings estimates moved up by 9.2% for 2016 and 20.1% for 2017 in the last 60 days.

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